4 ms·

Great news! Here's hoping they're able to place superchargers across the country within a year as planned. As much as one part of me wants to see Elon Musk su

Great news! Here's hoping they're able to place superchargers across the country within a year as planned. As much as one part of me wants to see Elon Musk succeed just to prove Romney wrong for calling Tesla a loser, it's more important to see Tesla do well for the benefits we may reap from companies like this trying to make better solutions and provide excellent competition to the status quo. That being said, I'm feeling pumped and want to shout out Sarah Lane's dorky-but-apt response to Romney: "Romney just called Tesla a loser company? ENGAGE LASERS, SILICON VALLEY!" https://twitter.com/sarahlane/status/253670586834890752 https://twitter.com/sarahlane/status/253670586834890752 Be inspired today!

twoodfin 14y ago
Just for future reference, what's the benchmark for calling Romney's prediction accurate? Do they have to liquidate or is it enough that they fail to be able to continue to independently deliver cars to the market? I'd love it if Tesla would succeed sheerly because their product seems so slick, but I agree with Romney that the government is a lousy institution to be picking companies that "should" get half-billion dollar loans/guarantees.
- nicholassmith 14y ago
  Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goes horrifyingly wrong then, well, there's already a couple of trillion in the hole, what's another half a billion between friends.
  - twoodfin 14y ago
    What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.
    - nicholassmith 14y ago
      I'd say partially it's new and sexy, but I imagine the suggested long term is it could help show America as a leader in green tech which should help attract outside investment into other green tech ventures, helping to kickstart a new economic driver. What Tesla is doing is creating an entire new venture from scratch from nothing, for them to hit profitability and make any solid return is likely to take a decade. VCs are unlikely to dump $500m for a 10 year wait, sure they'll know within a few years whether it was a good investment, but it's not likely to be viewed as a safe bet.
      - twoodfin 14y ago
        So the difference in "sexy" between Ford making a few hundred thousand electric cars and Tesla making a few hundred thousand electric cars is worth risking half a billion dollars of the taxpayers' money?
        nicholassmith 14y ago
        Note, not American so my interest in American tax dollars is pretty slim. But, in general yes it's worth the risk. America, like most countries, is looking for a new industry to keep the economy moving on up. Manufacturing used to do it, then that shifted away, then the financial sector was the keeping the economy ticking over and that went a bit awry, now there needs to be a next thing. Investing in Tesla is a chancy risk (although I imagine the US.gov has taken steps to minimise the risk), but if it pays off and helps develop a new economic motivation industry with green tech it could help as a job creation strategy and also attract investment from outside the country. Tesla looks and sounds sexy, they're a new darling with no baggage, they've got this guy involved who's daring and reasonably well liked with huge ideas, the cars themselves are gorgeous. That's much more exciting than Ford making electric cars. $500m sounds like a hell of a lot of money when it's out there, but the US spent $700b on the military in 2011. Compared to that $500m on Tesla is not a huge amount. Without being glib, $500m is a rounding error on the military spend, if Tesla strapped some rockets and bullet proofing it could slip into the budget.
        cadlin 14y ago
  - patrickgzill 14y ago
    Note that funding for such things used to come from individuals who could easily buy shares. Univac for instance, started in just this way, selling shares for a few dollars apiece. In these times, however, lawyers and government have strangled such bootstrap methods. Whether Tesla is a success or not, that the govt was needed indicates a failure in some other part of the system.
    - nicholassmith 14y ago
      I'd say it doesn't necessarily indicate failure in part of the system, just a significantly different set of priorities for investors and the global economy. Investors seem in general more interested in quick returns (there's exceptions, Amazon for instance), rather than putting money in for a slow burn and contributing toward a company. This isn't necessarily just down to investors being money machines, but in part due to the fact that the global economy is improving but still massively fragile, even if that $500m was split 5 ways, you'd have to convince an investor that $100m in a business that could go belly up is a safe bet, even though the economy could rapidly go wrong and ruin luxury items like electric cars. Plus lets be honest, if you play it on the investment game there's every risk people will buy in, get cold feet and dump the stock pretty quick, ruining confidence in the business and creating a negative public perception. I will tack on at the end, I'm not an economist so I could be way, way off base.
    - makomk 14y ago
      Lawyers and governments haven't strangled those bootstrapping methods - scammers have. Selling a few shares at a time to individuals is a really expensive and time consuming way of raising money, so the only reason to do it is if you can't raise money from larger investors. Now, sometimes there's a non-shady reason for this, but more often than not the reason is that small-scale investors can't afford the same level of due diligence to detect scams and can't afford to take legal action if the whole thing implodes. (We saw this with the Perma-Pave ponzi recently - it took one of the larger investors investigating, finding evidence it was a ponzi, and suing for anything to happen. The smaller investors were stuck flailing around amongst misinformation from people involved in the scam.)
- pm90 14y ago
  Well, they are not the same thing but: the govt. did invest in creating the ARPANET, and the DOE still counts as one of the largest customers of supercomputers. If the Govt. invests in new tech. areas that the private sector is unwilling/unsure of investing for the purpose of pushing the industry ahead, I don't really see anything wrong with that.
  - twoodfin 14y ago
    That's not the same thing, and just my point. The government didn't give Intel, Microsoft or Netscape $200M (or whatever the inflation-adjusted figure would be).
    - jbooth 14y ago
      The market's an optimization system, it's not some religious object with holy precepts. Sometimes you need to give optimization systems a hint.
      - twoodfin 14y ago
        The government has dozens of ways to structure incentives without making half billion dollar investments in particular companies. Telecom reform in 1996, for example, was a huge boon for the internet and related industries, and it didn't require picking one specific company over another.
        jbooth 14y ago
        Tesla wasn't picked over another company, they were the only company trying this. The DOE gives all kinds of grants and loans to innovative energy companies because it's seen as a national security issue.
- jlgreco 14y ago
  It is important to remember that if you think that, your beef should be with the government not the company that accepted it. I think to many people have taken their own disapproval of such programs to be a legitimate criticism if Tesla.
- deleted 14y ago
  [deleted]
temphn 14y ago
I would argue it is possible to believe both that Tesla is a great company and that Romney was generally right in that many of the green investments have indeed been losers (Solyndra, A123, Beacon Power, Abound Solar, ...). Lest we forget, Romney is/was a pretty great investor and entrepreneur himself, just like Elon Musk. It's unfortunate that Romney included Tesla in his list of green losers - he did start this fight - but Tesla is the exception that proves the rule. The government has not come close to making money on its green energy bets, and will not even if Tesla is a massive success. It has lost $535M on Solyndra, $249M on A123, and $400M on Abound Solar. Even if Tesla is profitable enough to pay back its $465M loan, this is a very poor risk-adjusted return. Many of the other companies in the green energy portfolio are reportedly quite sick as well; we shall see what happens to the 26 that received loan guarantees in five years. The dismal history of Russian and Chinese state-owned enterprises should be sufficient to give us pause, but the reasons that people oppose government funding of companies like this are several fold: 1. The government has the power to regulate or tax competitors into submission. Regulators have strong political incentives to begin colluding with funded companies at the expense of the consumer to show that the investment was a "success". This can be done without fingerprints by doing things like holding competitors to a higher bar when applying for permits. 2. Unlike the funds pledged by an LP, tax dollars are extracted coercively (via threat of police action for failing to pay the IRS). Arguably such acts should be kept to a bare minimum. 3. The federal government is notoriously poor at being on the cutting edge of technology; it is unlikely that they will make better investment decisions than professional investors. One can go further, but it is striking to see how companies like Uber or AirBnB run into political roadblocks, while other companies receive $500M loans. The government is not just any old company or investor, the government has guns and can compel action in a way that others cannot. As such it is very powerful to have as a investor and very dangerous to have as a competitor. Too dangerous.
- s_baby 14y ago
  With a small handful of high payoff winners, it's tax money well spent.
- deleted 14y ago
  [deleted]

twoodfin 14y ago

Just for future reference, what's the benchmark for calling Romney's prediction accurate? Do they have to liquidate or is it enough that they fail to be able to continue to independently deliver cars to the market? I'd love it if Tesla would succeed sheerly because their product seems so slick, but I agree with Romney that the government is a lousy institution to be picking companies that "should" get half-billion dollar loans/guarantees.

nicholassmith 14y ago
Governments for the most part can take long term(ish) views on things, whereas other investors might be more bullish about seeing a return a lot quicker, for better or for worse. Even traditional bank based investment wouldn't have worked, so it's unlikely something like Tesla would be able to get off the ground and get running. If Tesla does succeed the US Government gets a nice feather in the cap as well, if it goes horrifyingly wrong then, well, there's already a couple of trillion in the hole, what's another half a billion between friends.
- twoodfin 14y ago
  What's the "long term view" on Tesla? What's the benefit of them selling electric cars vs. Toyota or GM? The latter have clearly shown their capability to do so. Tesla just thinks a different approach to the market is superior. They'll be proven right or wrong in the next few years. That's well within the time horizon for an investor to make a reasonable decision: Who's more likely to make a profit with their electric car plans? Toyota, GM or Tesla? This is the kind of thing markets are good at. If the government wants more electric cars, just subsidize everyone's cars (which they're doing, of course). Don't try to be a super-VC.
  - nicholassmith 14y ago
    I'd say partially it's new and sexy, but I imagine the suggested long term is it could help show America as a leader in green tech which should help attract outside investment into other green tech ventures, helping to kickstart a new economic driver. What Tesla is doing is creating an entire new venture from scratch from nothing, for them to hit profitability and make any solid return is likely to take a decade. VCs are unlikely to dump $500m for a 10 year wait, sure they'll know within a few years whether it was a good investment, but it's not likely to be viewed as a safe bet.
    - twoodfin 14y ago
      So the difference in "sexy" between Ford making a few hundred thousand electric cars and Tesla making a few hundred thousand electric cars is worth risking half a billion dollars of the taxpayers' money?
      - nicholassmith 14y ago
        Note, not American so my interest in American tax dollars is pretty slim. But, in general yes it's worth the risk. America, like most countries, is looking for a new industry to keep the economy moving on up. Manufacturing used to do it, then that shifted away, then the financial sector was the keeping the economy ticking over and that went a bit awry, now there needs to be a next thing. Investing in Tesla is a chancy risk (although I imagine the US.gov has taken steps to minimise the risk), but if it pays off and helps develop a new economic motivation industry with green tech it could help as a job creation strategy and also attract investment from outside the country. Tesla looks and sounds sexy, they're a new darling with no baggage, they've got this guy involved who's daring and reasonably well liked with huge ideas, the cars themselves are gorgeous. That's much more exciting than Ford making electric cars. $500m sounds like a hell of a lot of money when it's out there, but the US spent $700b on the military in 2011. Compared to that $500m on Tesla is not a huge amount. Without being glib, $500m is a rounding error on the military spend, if Tesla strapped some rockets and bullet proofing it could slip into the budget.
      - cadlin 14y ago
- patrickgzill 14y ago
  Note that funding for such things used to come from individuals who could easily buy shares. Univac for instance, started in just this way, selling shares for a few dollars apiece. In these times, however, lawyers and government have strangled such bootstrap methods. Whether Tesla is a success or not, that the govt was needed indicates a failure in some other part of the system.
  - nicholassmith 14y ago
    I'd say it doesn't necessarily indicate failure in part of the system, just a significantly different set of priorities for investors and the global economy. Investors seem in general more interested in quick returns (there's exceptions, Amazon for instance), rather than putting money in for a slow burn and contributing toward a company. This isn't necessarily just down to investors being money machines, but in part due to the fact that the global economy is improving but still massively fragile, even if that $500m was split 5 ways, you'd have to convince an investor that $100m in a business that could go belly up is a safe bet, even though the economy could rapidly go wrong and ruin luxury items like electric cars. Plus lets be honest, if you play it on the investment game there's every risk people will buy in, get cold feet and dump the stock pretty quick, ruining confidence in the business and creating a negative public perception. I will tack on at the end, I'm not an economist so I could be way, way off base.
  - makomk 14y ago
    Lawyers and governments haven't strangled those bootstrapping methods - scammers have. Selling a few shares at a time to individuals is a really expensive and time consuming way of raising money, so the only reason to do it is if you can't raise money from larger investors. Now, sometimes there's a non-shady reason for this, but more often than not the reason is that small-scale investors can't afford the same level of due diligence to detect scams and can't afford to take legal action if the whole thing implodes. (We saw this with the Perma-Pave ponzi recently - it took one of the larger investors investigating, finding evidence it was a ponzi, and suing for anything to happen. The smaller investors were stuck flailing around amongst misinformation from people involved in the scam.)
pm90 14y ago
Well, they are not the same thing but: the govt. did invest in creating the ARPANET, and the DOE still counts as one of the largest customers of supercomputers. If the Govt. invests in new tech. areas that the private sector is unwilling/unsure of investing for the purpose of pushing the industry ahead, I don't really see anything wrong with that.
- twoodfin 14y ago
  That's not the same thing, and just my point. The government didn't give Intel, Microsoft or Netscape $200M (or whatever the inflation-adjusted figure would be).
  - jbooth 14y ago
    The market's an optimization system, it's not some religious object with holy precepts. Sometimes you need to give optimization systems a hint.
    - twoodfin 14y ago
      The government has dozens of ways to structure incentives without making half billion dollar investments in particular companies. Telecom reform in 1996, for example, was a huge boon for the internet and related industries, and it didn't require picking one specific company over another.
      - jbooth 14y ago
        Tesla wasn't picked over another company, they were the only company trying this. The DOE gives all kinds of grants and loans to innovative energy companies because it's seen as a national security issue.
jlgreco 14y ago
It is important to remember that if you think that, your beef should be with the government not the company that accepted it. I think to many people have taken their own disapproval of such programs to be a legitimate criticism if Tesla.
deleted 14y ago
[deleted]

temphn 14y ago

I would argue it is possible to believe both that Tesla is a great company and that Romney was generally right in that many of the green investments have indeed been losers (Solyndra, A123, Beacon Power, Abound Solar, ...). Lest we forget, Romney is/was a pretty great investor and entrepreneur himself, just like Elon Musk. It's unfortunate that Romney included Tesla in his list of green losers - he did start this fight - but Tesla is the exception that proves the rule. The government has not come close to making money on its green energy bets, and will not even if Tesla is a massive success. It has lost $535M on Solyndra, $249M on A123, and $400M on Abound Solar. Even if Tesla is profitable enough to pay back its $465M loan, this is a very poor risk-adjusted return. Many of the other companies in the green energy portfolio are reportedly quite sick as well; we shall see what happens to the 26 that received loan guarantees in five years. The dismal history of Russian and Chinese state-owned enterprises should be sufficient to give us pause, but the reasons that people oppose government funding of companies like this are several fold: 1. The government has the power to regulate or tax competitors into submission. Regulators have strong political incentives to begin colluding with funded companies at the expense of the consumer to show that the investment was a "success". This can be done without fingerprints by doing things like holding competitors to a higher bar when applying for permits. 2. Unlike the funds pledged by an LP, tax dollars are extracted coercively (via threat of police action for failing to pay the IRS). Arguably such acts should be kept to a bare minimum. 3. The federal government is notoriously poor at being on the cutting edge of technology; it is unlikely that they will make better investment decisions than professional investors. One can go further, but it is striking to see how companies like Uber or AirBnB run into political roadblocks, while other companies receive $500M loans. The government is not just any old company or investor, the government has guns and can compel action in a way that others cannot. As such it is very powerful to have as a investor and very dangerous to have as a competitor. Too dangerous.

s_baby 14y ago
With a small handful of high payoff winners, it's tax money well spent.
deleted 14y ago
[deleted]